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SUMMERS OUT FOR FED … WHAT’S NEXT? — POLITICO’s Ben White: “Larry Summers, who longed to be chairman of the Federal Reserve, ultimately concluded that an ugly fight over his nomination would be bad for the central bank and possibly even worse for the fragile U.S. economy. He told President Obama as much in a phone call and letter on Sunday. Obama did not disagree. Nor, at least at first, did financial markets. U.S. stock futures jumped on the Summers news as Wall Street judged that the likelihood of a brutal confirmation battle — and a possibly failed nomination — had receded considerably. Market players also said … that other leading candidates … including current Vice Chairwoman Janet Yellen and former Vice Chairman Donald Kohn, might be at least slightly more inclined than Summers to keep juicing the economy."

YELLEN LIKELY — “The biggest question now is whether Obama acquiesces to Summers’s opponents and nominates Yellen or feels he has to pick someone else to look like he was not pushed into a corner. The White House did not initially warm to Yellen’s candidacy, but a person close to process said that she is now the most likely pick. The announcement may come soon but likely not this week, according to the source."

GEITHNER UNLIKELY — “One other candidate also never seems to recede from public chatter: former Treasury Secretary Timothy Geithner. Obama likes and trusts Geithner and has sounded him out about the Fed job. But Geithner, who has a book coming out next year and is doing lucrative private speaking and other work, has steadfastly said he is not interested in the job at this point."

BIG FIGHT AVOIDED – “The biggest market and economic impact of Summers’s withdrawal may seen in be in the reduced odds of a confirmation fight coming just as Republicans and Democrats do battle over how to fund the government and raise the nation’s borrowing limit. … Indeed, people close to Summers say one main reason the former Treasury secretary decided to withdraw his name is that he did not feel he could ask the president to expend limited political capital on him at a time when Obama has been asking liberal Democrats to support his push to use force in Syria and may need to ask them to support a budget deal with Republicans they don’t especially like. ‘If they put the nomination up sooner they could have gotten it done,’ said a person close to both Summers and the White House. ‘They let it hang out there too long.’” http://bit.ly/17CbxJf

DEM OPPOSITION SANK SUMMERS — POLITICO’s Ben White: “During their call, Summers told Obama he believed there was now too much political opposition to his nomination to move forward, a person familiar with the phone call said. Summers told Obama that his nomination now would create too much political uncertainty for the Fed and could thus be damaging to the economy. Obama accepted Summers’ rationale and did not attempt to convince him to continue as a candidate for the Fed job … Summers was a top initial candidate for the Fed job among senior current and former White House officials. Obama was also inclined to appoint Summers to the post, people close to the White House said. But the longer time dragged on without a nomination, the more liberal groups and some Democratic senators were able to organize to oppose Summers, who many on the left viewed as too close to Wall Street and not strong enough on financial regulation.

“Opposition to Summers among Senate Democrats has been obvious for weeks but it escalated on Friday when Sen. Jon Tester (D-Mont.) announced he would vote against …

At least three other Democrats on the Senate Banking Committee were expected to oppose Summers — Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.) — raising the politically uncomfortably scenario of Obama needing to rely on Republican votes just to get his choice for a Fed chief out of committee. …

“People close to Summers believed had the nomination come sooner then Summers could have been approved by the Banking Committee and the full Senate. Summers supporters believe that the former Treasury secretary could still be confirmed but that the nomination fight would be too long and difficult."

“NO QUESTION” SUMMERS WAS FIRST CHOICE – “A person close to the White House said Summers was ‘absolutely no question’ Obama’s first choice to lead the Fed but that events conspired to delay the nomination too long. Those events included revelations of NSA domestic surveillance and the Syria debate. ‘You just had it hanging out there too long and in the end Larry felt strongly that as Fed chairman you can’t have this ugly political process,’ the person close to the White House said.” http://bit.ly/1aDleZi

A CONNECTED DC INSIDER emails to say the nomination was always doomed: “It was a political impossibility from go as I saw it. Have you ever seen such opposition for a candidate from the Potus' own party? … Never in my 25 yrs... Why ignore the flashing red signals?”

MARKETS POP — Reuters/Sydney: “The U.S. dollar slid while bonds and shares rallied in Asia on Monday after news … Summers had dropped from the race to head the Federal Reserve promised to prolong the lifetime of super-easy money. Further whetting risk appetite was signs of progress on Syria … Summers' surprise decision comes just before the central bank meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases from the current pace of $85 billion a month.

Investors wagered that U.S. monetary policy would stay easier for longer should the other leading candidate for Fed chair, Janet Yellen, get the job.” http://reut.rs/16wbnn9

“MODESTLY BULLISH” FOR STOCKS — Tangent Capital’s Jim Rickards emails: “Should be slightly bullish for stocks. The reason is that the default choice is assumed to be Yellen and she's a super-dove. Yellen has given high profile speeches saying there is no example in history of inflation emerging with this much slack in labor and industrial capacity. She does not see the same downside in continued QE … But, the Yellen boomlet will be short-lived.”

OUCH. VERY OUCH – Sen. Bernie Sanders Sanders Statement on the Federal Reserve: “I applaud Larry Summers for withdrawing his name from consideration. The truth is that it was unlikely he would have been confirmed by the Senate. What the American people want now is a Fed chairman prepared to stand up to the greed, recklessness and illegal behavior on Wall Street, not a Wall Street insider whose deregulation efforts helped pave the way for a horrendous financial crisis and the worst economic downturn in the country since the Great Depression.”

FIVE YEARS LATER – The White House last night released a report assessing the state of the economy and financial system five years after the crisis: http://bit.ly/1eDjcgS

THIS MORNING ON POLITICO PRO FINANCE – The latest on Larry Summers dropping out of the Fed race [http://politico.pro/P8FNAe] ... Kevin Cirilli on Barney Frank, Elizabeth Warren and “too big to fail”[ http://politico.pro/1bfeuDF] … To learn more about Pro's subscriber-only coverage -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD MONDAY MORNING — For early readers, M.M. is on CNBC’s “Squawk Box” at 6:00 a.m. to discuss Summers, the Fed and what’s next. Others can look for clips on Twitter. Follow @morningmoneypro for alerts as well as other financial news from POLITICO Pro Financial Services, and @POLITICOPro.

DRIVING THE WEEK — President Obama returns to economic themes this week (call it a “pivot” if you absolutely must). He delivers remarks in the Rose Garden this morning on the five-year anniversary of the Lehman attack that will include cautions to Republicans not to force any more “self-inflicted wounds” such as shutdowns and debt ceiling fiascos. Obama speaks to the Business Roundtable on Wednesday and travels to Kansas City for a jobs event on Friday … FOMC on Wednesday at 2 p.m. likely to announce the beginning of its efforts to wind down stimulus. Bernanke speaks to the press at 2:30 p.m. … Treasury Secretary Jack Lew speaks before the Economics Club of Washington on Tuesday …

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SUMMERS FLY-AROUND –

OBAMA DOES FRIENDS NO FAVORS — POLITICO’s Jonathan Allen: “Obama’s got a knack for turning trial balloons into piñatas, and then leaving his allies to pick up the mess. The pattern: He floats a buddy for a top job early, deliberates long enough for the opposition to gather steam, defends his pal too late to do any good, and then regretfully accepts defeat. First it was Susan Rice, his choice for secretary of State. Now, Summers has withdrawn …

“Their candidacies were so poorly handled that neither ever made it to the stage of being nominated, much less getting blocked — or voted down — by the Senate. … The Summers snafu is particularly problematic because the choice badly divided Obama’s fellow Democrats. Word from Hill allies was that the Senate could reject Summers, and already as many as four of the 12 Democrats on the Senate Banking Committee were ready to vote against him. A larger question is of the president’s toughness.” http://bit.ly/18pYNZ8

OBAMA FORCED DOWN THE LIST — WSJ’s David Wessel, who first reported the Summers news: “Summers pulled out of the contest … after weeks of public excoriation, forcing … Obama to move further down the list of contenders to head the central bank. … One leading candidate is … Yellen … But the public lobbying on her behalf appears to have annoyed the president, say administration insiders, and may lead him to look elsewhere. … Dark-horse candidates include Stanley Fischer, an American citizen who recently stepped down as governor of the Bank of Israel, and Roger Ferguson … J. Bradford DeLong, a Summers backer at the University of California, Berkeley, said the decision to pull his name is ‘not something Larry would have done were he really the guy his adversaries claim he is.’” http://on.wsj.com/17Cj3Uy

BE AN EDUCATION PRO: We’re excited to announce that Pro Education launches this Wednesday, Sept. 18th! Our newest policy area, Pro Education, will feature original reporting, breaking news and insight into education policy. Beginning Wednesday, paid subscribers to Pro Education will continue to receive the morning newsletter between 5:30 and 6:00 a.m. and non-subscribers to Pro Education will receive an abridged version of Morning Education after 9:30 a.m. To inquire about subscription rates, email info@politicopro.com or call (703) 341-4600.

LEFT PRESSES FOR YELLEN — POLITICO’s Kevin Cirilli: “Progressives didn’t hit the Federal Reserve jackpot quite yet.Sure, they’re happy … Summers … took himself out … But now they say it’s not enough that Summers doesn’t get the job — they want … Yellen to lead the central bank.Yellen, the current Fed vice chairwoman, would be the first female Fed chairman if confirmed and her supporters also say she would push for policies to help the poor and middle class.Progressive groups had been preparing to lobby Senate Banking Committee members this week to oppose Summers and support Yellen.

“Those efforts for Yellen will continue, said Robert Borosage, president of the Institute for America’s Future. … National Organization President Terry O’Neill told POLITICO that ‘Larry Summers did the right thing in withdrawing and it clears the way for Janet Yellen.’ ‘For many, it was just anti-Summers, but for me the issue was really there’s a glass ceiling,’ O’Neill said. ‘What I saw happening was the better-qualified woman being passed over for a less-qualified man.” http://bit.ly/1aMFDyn

SYRIA WAS FINAL SIGNAL — NYT’s Annie Lowrey and Binyamin Appelbuam: “For … Summers … the messy debate over a military attack in Syria was the final sign.

After weeks of opposition to his candidacy from an array of progressives, the president’s inability to rally Congressional Democrats on Syria persuaded Mr. Summers that his most important audience — the Senate, which must confirm a Fed chairman — probably could not be won over. He concluded that the White House was also unlikely to overcome opposition to his candidacy from many of the same Democrats, who view him as an opponent of stronger financial regulation … Mr. Summers’s decision, which he shared with the president in a phone call Sunday followed by a letter, was described as reluctantly made and reluctantly accepted. Mr. Summers wanted the job and Mr. Obama wanted to pick him. But the public opposition of three Democrats on the Senate banking committee, the first step in the confirmation process, surprised the White House and forced a calculation that this was a battle the administration could not afford to fight.” http://nyti.ms/16waL0Y

ALSO FOR YOUR RADAR –

GOP SEES DEBT LIMIT AS BETTER FIGHT — POLITICO’s Jake Sherman and John Bresnahan: “A government shutdown is looming on Oct. 1. But don’t worry about it. That’s the message the House Republican leadership and its allies are spreading as Congress moves toward a fiscal showdown with … Obama and the Democrats, a clash with huge political and economic ramifications for both parties. Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), Majority Whip Kevin McCarthy (R-Calif.) and their allies are instead privately urging rank and file to forgo a clash over government funding — and a possible government shutdown — and instead dig in against Obama and the Democratic Senate when the debt ceiling needs to be lifted …

“Boehner and his top lieutenants believe that digging in for a fight over the debt ceiling gives them more leverage against Obama and Democrats. Republicans hope to take advantage of Obama’s desire to blunt $20 billion in sequester cuts that kick in Jan. 1 to reach a broader budget deal with the White House. There’s even been chatter in and around leadership about holding a vote on a debt ceiling bill before the government funding measure — a way to satiate conservatives’ budget-cutting hunger and help avoid a government shutdown.” http://bit.ly/1egLXi8

OUT TODAY: NEW BOOK ON JOBS — Hitting shelves and Amazon etc. today: “‘Where the Jobs Are: Entrepreneurship and the Soul of the American Economy,’ by John Dearie, Executive Vice President at the Financial Services Forum, and Courtney Geduldig, Vice President of Global Regulatory Affairs at Standard & Poor’s Ratings Services. Recent research has shown that new business — start-ups — account for virtually all net new job creation, and yet new business formation has declined significantly in recent years.

“To find out why, Dearie and Geduldig conducted roundtables with entrepreneurs in 12 cities across the United States. What they heard provides ground-level insights into the ongoing jobs crisis and offers new ideas for restoring America's great job-creation machine. In their book, they recount what they heard and offer a 30-point jobs agenda based on what entrepreneurs said they need from policymakers. … All proceeds of the book will be donated to various entrepreneurship incubators and accelerators. Visit www.endthejobscrisis.com” Book link: http://amzn.to/1egLwV1